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New accountant carries out work without professional clearance...

A client owed me money.  I received prof clearance letter from new firm (which I was quite happy about).  I replied stating that the client owed money and we would release information as and when we received the overdue funds.

We have still not received the money and I have today discovered that the new accountant has carried out the next years accounts (without my paperwork) and filed these at Companies House.

Is this common practice?  I assumed that professional firms would have waited for complete clearance from us first.

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19th Oct 2010 23:21

Unpaid bills do not amount to a professional reason

There is no requirement to await professional clearance before acting.  If, as you indicated, your only objection was that the client owed you money, then there was actually no professional reason why they should not act - unpaid bills are a commercial matter between you and your customer(ex).

Would delaying the accounts have meant that the client incurred penalties?  That being so they would have been unprofessional not to complete the accounts.

I assume of course that they have managed to obtain copies of, or reconstruct, whatever figures they needed from other sources. I would imagine (if they have any sense) that they will also have got their fee up front in view of your letter to them.

All of which, of course, leaves you unpaid and with no "lever" to use to obtain payment - I suggest a final demand followed by a court claim may be your only option to recover the outstanding fees.

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20th Oct 2010 10:30

It is not "clearance"

I agree with c_d.

I would just emphasise that the incoming accountant is required (either by the rules of his professional institute or by best practice and common sense) to ask the outgoing accountant if there is anything he should know about before agreeing to accept the appointment.  You say you were happy to pass on the client, so there is no problem on professional grounds, and you alerted the incoming accountant to the unpaid fees position.  It was then up to him and he evidently decided to act for the client.

The request for information is ancillary.  Declining to provide info until your fees have been paid is the standard method of pressuring the client to pay up, but as c_d says, if the new accountant could manage without it, good luck to him and tough for you as you have lost your best weapon.

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21st Oct 2010 10:46

Clearance is not permission

There is a common misconception that a new accountant cannot take over until the old accountant agrees to it. I've come across more than one occasion where a clearance letter has been met with a general refusal to co-operate including withholding company records (which cannot be placed under lien if lack of access to them prevents directors fulfilling their duties under the Companies Act) Professional clearance is solely to ensure the new accountant would not risk their professional position by taking on the new client. In fact, even silence from the old accountant can be sufficient in this regards (if no reply was sent within a reasonable time then that can be accepted as no professional matters arising, though a follow-up giving a timescale for this assumption is usually advisable) 

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21st Oct 2010 10:50

No a requirement, merely a courtesy

We recently took over several clients from a sole practitioner who had died.  I wonder how we were supposed to get professional clearance ?    anyone got a Ouija board ?

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